Texas Minority Businesses Remain Underused

The state of Texas Historically Underutilized Business program was founded in 1991 with the aim of helping minority- and women-owned businesses gain access to public and private sector contracts. Housed within the comptroller's office, the program allows for a business to be certified as an HUB, and thus eligible for contracting opportunities with the state. A recent disparity study commissioned by the comptroller, however, has revealed that the state still has quite a ways to go when it comes to achieving across-the-board equity in contracting opportunities. For example, of $38.61 billion in state spending on prime contracts, HUB vendors received a little more than $2.95 billion, only 7.64 percent. For African American HUBs, it was a paltry 0.63 percent.

The report, which covers the period from September 1, 2005 to August 31, 2008, shows HUB utilization to be strong in some areas. For instance, the rate of HUB utilization for "special trades" construction, a procurement category, was nearly 27 percent. However, the general picture that emerges is one of deep and continuing disparities, particularly in categories such as heavy construction, where some of the largest and most lucrative contracts are to be found. Data was gathered from a variety of sources, including data from 210 participating state agencies and institutions of higher education, a review of anecdotal evidence from four public hearings, and a survey of 1,032 firms.

Clifton Miller, believes there is one way to have sustained economic recovery. "It has to be job-based," he said. "In order for it to be job-based, it must include small businesses - because small businesses have been acknowledged for the last 15 years as the engine of economic growth and job creation - and the fastest-growing segment of small businesses are those owned by people of color."

Miller is a founding director of the Minority Business Enterprise Institute of Public Policy, a non-partisan nonprofit organization founded in 1997 to serve as a means for minority entrepreneurs in Texas to participate in the political process. Among other things, Miller, who is Black, is adamant about the need for Black entrepreneurs in particular to act as more of a unified political bloc, even to the point of going beyond a traditional civil rights framework.

Miller challenges the belief that economic development is driven mainly by attracting large corporations to a city. Miller believes that job growth - with the associated building of a city's tax base - is much more determined by small businesses, and that this is true on many levels for African Americans.

"The reality is, when AT&T moved here, they created about 400 jobs. Those were all White-collar jobs, most of those people ended up living in the suburbs, and that didn't bring any economic development to the city of Dallas," Miller said. "Small businesses create the value, create the jobs, and that's how you turn a tax consumer into a taxpayer."

Another "soldier" in the battle to close the HUB utilization gap is Jim Wyatt, chairman of the Texas Association of African American Chambers of Commerce. Commenting on the same disparity study that Miller finds so concerning, Wyatt observes, "we are not making very much progress in the realm of minority businesses doing business with state agencies. If you just put it in the capsule and look at that particular document, we're not doing very well."

"As a professional watchdog, [as far as] what's occurring in trying to make a difference for small businesses, we look specifically at where the money is," Wyatt said. "The money is in heavy construction. If we look at that, African American businesses make up half a percent of those firms doing business with the state."

TAAACC recently created its own Professional Services Committee to provide hands-on troubleshooting to HUBs still struggling to land state contracts. "We're on a fact-finding mission, and trying to do the due diligence of figuring out what's causing our African American businesses to not get a piece of the pie," Wyatt said.

Texas' HUB program wheezes along during a time of massive budget deficits for the state, and in the face of a political climate during which the very concept of affirmative action - which includes set-asides for minority-owned firms -as a result of recent court decisions combined with three decades of sustained attacks from conservatives, hangs on by a thread.

"There are always attacks or efforts to eliminate or limit those preferences for historically underutilized businesses, or minority businesses. It happens repeatedly in different [pieces of legislation], or some of it is done by stealth. For instance, that's what the Texas Conservative Coalition and Research Institute is doing; they just want to wipe it out in the name of the budget," said Miller, referring to a conservation organization that has recently proposed completely eliminating the HUB program for the sake of balancing the state budget.

"Under the Bush Administration, funding to the Small Business Administration and to every agency that supported minority- and women-owned businesses was cut. There are a couple of key issues here: Number one, there's a movement to resist what they call 'preferences.' The reality is that preferences exist all the time, and the only time preferences are a problem is when it's for somebody who doesn't look like the mainstream. Preferences exist in college admissions because if your daddy went there, it means you're a legacy. So that's a preference. The reality is that most of the preferences out there benefit large businesses as opposed to small business, and those programs are sacred."

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